Joshua Davis of Wired explains how Elon Musk turned Tesla into the car company of the future:
In September 2007, he flew to Stuttgart, Germany, and met with a group of Daimler executives, who listened skeptically as Musk told them how great his technology was. They weren’t sold.
But two months later Musk got an email from Herbert Kohler, Daimler’s head of advanced engineering, saying that he and some other Daimler execs would be in California in six weeks and would be willing to look at Tesla’s technology.
It was all Musk needed. He immediately called JB Straubel, Tesla’s CTO.
“We need to make an electric Smart car in six weeks,” Musk said. “Can you do it?”
Straubel pointed out that it would mean he’d have to pull engineers off the Roadster at a time when they were still desperately trying to solve production problems. It was a tough call, but Musk believed that if they could prove themselves to Daimler, they could win a valuable contract. In addition to the much-needed cash, it would validate Tesla in the eyes of the world. They had to try.
Straubel had another question: Where was he supposed to get a regular, gas-powered Smart car to retrofit? At the time, Daimler didn’t sell Smarts in the US.
With a bit of research, he discovered that the cars were sold in Mexico. He made a few calls and located a dealership in Tijuana with stock on hand. He hurriedly decided to send someone to fetch a car. A Tesla engineer suggested a friend who was fluent in Spanish, and, after a quick call, the guy agreed to make the trip south.
Straubel walked over to the finance department. “I need $20,000 in cash in a bag right now,” he said. “We’re sending someone to Tijuana to buy a Smart car.”
The finance person noted that a lot could go wrong with that scenario but got Straubel the money. Three days later, the engineer’s buddy showed up at Tesla headquarters with a brand-new Smart car.
Straubel and his team removed the 83-horsepower gas engine and set to work building a custom battery pack that would fit in the tiny car’s engine compartment. Next, they refashioned a Roadster motor to power it. When they got too tired, they napped underneath a staircase, but the pounding of feet overhead made it hard to stay asleep for long.
Finally, at one o’clock in the morning, five and a half weeks after setting to work, the reengineered Smart was fully assembled. Straubel got in the driver’s seat and switched on the power. He goosed the accelerator and rocketed out of the garage and into the parking lot. When Straubel floored it, the front wheels lifted off the ground and the back tires left marks on the asphalt.
Straubel called Musk and told him the car was ready for the Germans.
The Daimler executives sat down in Tesla’s conference room midmorning on January 16, 2008. Musk walked them through a PowerPoint presentation that explained the advantages of the Roadster’s technology. Kohler wasn’t impressed. He wasn’t here to talk about a flashy, limited-run show car. He wanted to know if Tesla could mass-produce battery packs quickly for the Smart. His frosty demeanor indicated that, in his opinion, it didn’t seem likely.
“We’ve actually got something to show you,” Musk said and asked the Daimler execs to follow him.
Kohler spotted the shiny new Smart sitting in the middle of the garage and didn’t smile. It might have seemed like a gimmick at first—Musk managed to get a Smart into the US. Big deal.
“It’s electric,” Musk said.
“What do you mean?” Kohler asked.
“We put in a Tesla battery and motor.”
Kohler examined the car. Straubel had been careful not to alter its shape or interior, so it was impossible to tell that it had been modified.
Kohler got behind the wheel and Musk hopped in the passenger seat. When the German stepped on the accelerator, the car bolted out of the garage and disappeared. Straubel waited nervously with the other Daimler executives. After 15 minutes, the Smart tore back into the garage. Straubel noticed that the normally taciturn Kohler was trying hard not to smile.
“Let’s explore a partnership,” Kohler told Musk.
[...]
In January 2009, Daimler finally felt confident enough to buy 1,000 battery packs for the Smart in a deal worth more than $40 million for Tesla. Then, in May of that year, Daimler agreed to buy a nearly 10 percent stake in the company for $50 million, giving Tesla a valuation of more than $500 million. More important, a pioneer of the internal combustion engine was vouching for the tiny electric car startup.